May 2, 2018 / 2:03 PM / 18 days ago

EU reduces farm aid to cut costs, France says unacceptable

PARIS, May 2 (Reuters) - The European Commission on Wednesday proposed to reduce farm subsidies and leave more latitude to member states under the bloc’s Common Agriculture Policy (CAP), drawing swift condemnation from France, which called the move “unthinkable”.

The CAP proposal comes as part of a bigger, new, multi-year EU budget set to trigger battles among member states over how to fill the funding gap left by Britain’s exit next year.

In an effort to cut costs and promote other policies, farmers will see aid shrink in the 2021-2027 period to 365 billion euros ($438 billion), down 5 percent from the current CAP, the Commission said.

This would represent a share of less than 30 percent of the total budget of 1.279 trillion euros, down from more than 45 percent 20 years earlier.

“Against the backdrop of Brexit and demands to fund new and emerging priorities, the CAP budget is being reduced by a modest 5 percent,” European Commissioner for Agriculture and Rural Development Phil Hogan said in a statement.

France, by far the largest beneficiary of the CAP, said the proposals were unacceptable.

“For Stephane Travert, the Agriculture and Food Minister, such a drastic, massive and blind cut is simply unthinkable,” the ministry said in a statement.

“It poses an unprecedented risk to farms’ viability by seriously impacting farmers’ incomes, for whom direct aid is an essential safety net. France cannot accept any decline in direct income for farmers.”

In the proposals, which need to be approved by member states, EU countries will have to cap subsidies for large farms or impose degressive payments depending on farm size, with the rest redistributed to small and medium-sized ones.

“Direct payments to farmers will remain an essential part of the policy, but will be streamlined and better targeted,” the Commission wrote in its proposal.

Direct payment levels per hectare among member states will also continue to converge towards the EU average, it said.

The Commission also aims to introduce greater conditionality to direct payments with a significant part of funding to be ring-fenced for actions beneficial to the climate, the environment and rural development.

“This system will provide greater flexibility for member states, allowing them to better target environmental objectives and be more ambitious,” it said.

The proposal to give member states more room to maneuver has been criticised by farm unions as a Commission attempt to go back on the CAP’s initial idea of a common policy.

The Commission also proposed a new reserve to address crises linked notably by unforeseeable developments in international markets.

Farmers across the agriculture sector, from milk to grains and sugar, have suffered sharp drops in revenues in recent years due to hefty global supplies.

EU farmers group COPA-COGECA, reacting on Twitter, expressed “strong disappointment with the cuts”.

“A strong budget is needed for a sustainable, modern EU agriculture sector delivering on various fronts,” it said. ($1 = 0.8331 euros) (Reporting by Sybille de La Hamaide; Editing by Dale Hudson)

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